Measuring sustainability: Statistics for long-term policy choices

Abstract

An important feature of the updated System of National Accounts (SNA) and the updated Balance of Payments and International Investment Position Manual (BPM) frameworks relates to the measurement of sustainability, supporting long-term policy decisions. The new statistical guidance, together with the System of Environmental-Economic Accounting (SEEA), enhances the ability to track the accumulation and use of a more broadly defined set of capital assets. By broadening the scope of macroeconomic statistics to include sustainability dimensions, the updated frameworks provide policymakers with better tools to manage risks, evaluate policy trade-offs, and align short-term decisions with long-term economic objectives.

1 Introduction

This article highlights the main updates to the 2008 System of National Accounts (SNA) ¹ in view of the increased attention on and data needs concerning sustainability. It provides a concise overview of the relevant updates and/or new elements in the 2025 SNA, ² and, in doing so, addresses the measurement of both the sustainability of economic activity and the preservation of the well-being of future generations more generally. In relevant cases, reference will be made to the latest guidance in the seventh edition of the Balance of Payments and International Investment Position Manual (BPM7).

The article describes first and foremost the ways in which the SNA (and BPM) can contribute appropriately to the wider objectives of measuring sustainability. Elements concerning the agenda for addressing issues related to the measurement of well-being are covered in other articles of this issue of the Journal of the International Association of Official Statistics, more specifically the article on “Tracking economic well-being in the 2025 System of National Accounts”.

This article is organized as follows. Section 2 deals with the rationale for addressing the broader notion of sustainability and why it is important to address it in more detail in the national accounts. It also explains the two main avenues to address sustainability: first, by looking at the integrated framework of national accounts – in the past typically referred to as “central framework” or “core framework” – including its limitations; and secondly, by discussing how the broader notion of sustainability can be recorded in a suite of thematic accounts, complementary accounts, and supplementary data. Section 3 then provides more detail on the updates of the integrated framework of national accounts, while Section 4 pays attention to environmental sustainability more specifically, by describing the links with the relevant complementary international standards, the System of Environmental-Economic Accounting (SEEA) Central Framework and the SEEA Ecosystem Accounting. Section 5 provides more details on how an enlarged, capital-based approach to measuring sustainability can inform the monitoring and analysis of sustainability, thereby also paying attention to some of the challenges and limits of this approach to monitoring and analysis. Section 6 describes the new guidance for measuring sustainable finance, and Section 7 concludes.

It is important to add one caveat upfront. This article mainly focuses on the work that has been done in the area of national accounts and balance of payments, and its contribution to the measurement of sustainability. Even though the article also deals concisely with the progress made in the area of environmental-economic accounting, it definitely falls short in acknowledging the fact that the updates of the 2008 SNA and BPM6 heavily rely and build upon all the work that has been done in environmental-economic accounting, various other areas of statistics, as well as the related research completed in academia, such as on wealth accounting.

2 Measuring sustainability more generally

Over the past decades, the statistical community has increasingly shifted its attention toward measuring well-being and sustainability. This evolution reflects a growing recognition that economic indicators alone cannot capture well-being or the long-term viability of development in full. While the integrated framework of the SNA provides a robust and integrated framework for measuring economic activity, it cannot, by itself, address all aspects of well-being and sustainability. These concepts are multidimensional, requiring collaboration between the SNA and other frameworks and measurement initiatives to ensure comprehensive analysis. The 2025 SNA acknowledges this reality by offering recommendations that support the measurement and analysis in the area of well-being and sustainability, while making clear that it does not aim to provide a definitive quantification of well-being or sustainability, which would go well beyond the integrated framework of national accounts.

Two fundamental ideas underpin the framing of well-being and sustainability. The first relates the concepts of well-being and sustainability to the concept of sustainable development. The definition of sustainable development is that of the 1987 Brundtland Commission report: development that “meets the needs of the present without compromising the ability of future generations to meet their own needs”., ³ p. 423 This basic idea links the measurement of well-being to the measurement of sustainability, i.e., well-being needs to be sustained into the future.

The second idea draws on the work of the Joint UNECE/Eurostat/OECD Task Force on Measuring Sustainable Development. ⁴ In the report of this Task Force, the broad concept of well-being of households is being reflected in a mix of objective and subjective measures concerning well-being in the “here and now”, or current well-being, the well-being of future generations, and the well-being of people elsewhere. This perspective places households at the center of measuring well-being, as it is ultimately the lives of people that are the primary focus of any well-being framework.

To understand the potential role of the SNA in supporting the measurement of well-being and sustainability, it is important to recognize the primary purpose of the integrated framework of national accounts: capturing economic activity through measures of production, income, and (the accumulation of) wealth. As such, the SNA has produced rich, coherent datasets that support the design, analysis and evaluation of economic policies around the world. Among its outputs, gross domestic product (GDP) stands out as one of the most widely recognized and used statistics globally. However, the widespread use of GDP has led to misconceptions. It is often looked upon as a proxy for the general performance of a country, including its people's well-being and their standard of living. Such use of GDP has been repeatedly criticized, notwithstanding the advice of the SNA, both in its 2025 update and earlier versions, that there are significant limitations in using GDP and other national accounts aggregates as being representative measures of well-being and sustainability.

Despite these limitations, the SNA can play an important role in advancing the measurement of well-being and sustainability through two primary avenues. The first avenue recognizes that, other than GDP, there is a very wide range of data and aggregate measures contained within the SNA's integrated framework that can be used to inform the discussion of well-being and sustainability. Examples include household disposable income, household (actual) final consumption, household saving and net wealth. Further, it is possible to supplement the aggregates at the national level with data on the distribution of these economic measures across groups of economic units. For example, the 2025 SNA recommends disaggregation of measures of household income and wealth by income decile, type of household and other characteristics, thus supporting the discussion of well-being and sustainability.

The second avenue recognizes that a significant part of the development of frameworks and approaches to the measurement of well-being and sustainability has involved applying and adapting the accounting rules and structures applied in the integrated framework of the SNA. Examples of these accounting-based approaches cover relatively recently developed statistical products, such as extended accounts on unpaid household activities, thematic accounts on health care, and thematic/extended accounts on education and training, as well as the significant advancements made in the area of environmentally related statistics. Such approaches typically try to ensure that data about the environmental and social dimensions are consistent with, and can be linked to, data from the SNA's integrated framework.

Measuring the sustainability of well-being requires more than integrating data from different dimensions. It demands the introduction of a time dimension, i.e., assessing whether the capacity to provide well-being can be secured in the future. From an economic perspective, this capacity is generally expressed in terms of the capital – economic, natural, human and social – available to support future well-being, which can be captured by monitoring monetary and non-monetary data about these types of capitals and the associated changes in benefits (including losses of benefits).

The integrated framework of the SNA covers economic capital comprehensively. It includes non-financial assets (such as buildings, machinery, and dwellings, etc.), as well as financial assets and liabilities. The relevant data cover the values of the relevant stocks as well as changes in the values of these stocks due to investment, depreciation and other changes in the value of assets and liabilities.

Accounting for natural capital, however, presents additional challenges. While the integrated framework of the SNA accounts for (the changes in) stocks of natural resources, such as mineral and energy resources, biological resources, water resources, and land, it does so within a limited scope. Recognizing the growing importance of these resources, the 2025 SNA introduces a separate category for them and treats depletion of these resources as a cost of production, similar to depreciation. These and other changes to the 2008 SNA are addressed in more detail in Section 3.

To complement the measures of natural resources in the integrated framework of the SNA, the SEEA provides a more comprehensive set of monetary and non-monetary accounts covering both natural resources and ecosystem assets. It includes measurement of (i) monetary and physical data on (changes in) stocks of natural resources; (ii) monetary and physical data on (changes in) stocks of land and ecosystem assets; (iii) the pressures exerted on the environment through economic and human activity (e.g., flows of air pollutants, solid waste, wastewater); and (iv) responses by economic units in terms of expenditures, taxes, subsidies and other flows recorded but not separately identified in the integrated framework of national accounts. The SEEA thus facilitates a broader recording of (economic) well-being in addition to broader measures of natural capital and its sustainability. A more detailed discussion of natural capital is the topic of Section 4.

In relation to human capital, another critical component of sustainability, some of its benefits are explicitly recorded in the integrated framework of national accounts (i.e., remuneration of employees), but human capital itself is not included as an asset category. Measures concerning human capital have been developed separately, and a short introduction to this line of work is provided in chapter 35 of the 2025 SNA. While it is possible to establish a link to the integrated framework of national accounts, fully integrating human capital in the SNA's integrated framework remains a challenge, requiring further research and methodological development.

Social capital, defined as the combination of formal and informal institutions and networks that support the functioning of our societies and economies, is even more complex. The 2025 SNA acknowledges its importance and offers a short preliminary discussion in chapter 35, but measurement approaches for capturing social capital are still evolving. Future research will need to identify ways in which social capital can be defined, quantified, and incorporated into accounting systems.

In summary, while the SNA cannot fully capture well-being and sustainability, it can play an important role in supporting their measurement. By making refinements to the integrated framework, adapting accounting principles to new domains, and integrating economic, environmental and social dimensions, the SNA can contribute to a more holistic understanding of development. The 2025 SNA represents an important step in this direction, offering guidance for linking economic data with broader measures of well-being and sustainability. However, achieving a truly comprehensive framework of integrated accounts will require continued collaboration, innovation, and research across statistical systems.

3 Updating the integrated framework of national accounts

The 2025 SNA contains various changes to the 2008 SNA which relate to the measurement of sustainability. Confining the discussion, in this section, to the changes made to the integrated framework of national accounts, the updated guidance mainly concerns the measurement of natural resources. In this section, the most important of these changes are discussed, including their contribution to better measuring sustainability.

3.1 New classification of non-financial assets

The 2025 SNA contains a new classification of non-financial assets. The main change compared with the 2008 SNA is that a third headline category for natural resources has been created, which brings together various natural resource-related classes that were scattered across the 2008 SNA asset classification; see Figure 1. A key motivation for this change is that it gives greater visibility to natural resources and also facilitates better alignment with the four types of capital mentioned in Section 2.

Figure 1.

Classification of natural resource assets in the 2008 and 2025 SNA.

The new category of natural resources covers both produced and non-produced non-financial assets and distinguishes between five classes, as indicated in the figure: land, mineral and energy resources, biological resources, water, and other natural resources. An important change is that renewable energy resources are explicitly recognized in the classification as a separate asset class under mineral and energy resources. Some of their value may have been included as part of the value of land under the 2008 SNA. Separately identifying this value may prove relevant for informing the energy transition of countries.

Several changes have also been introduced to biological resources, which are now split, at the first sublevel, into resources yielding repeat products (covering various types of animal resources and tree, crop and plant resources), resources yielding once-only products (covering non-cultivated resources such as fish in open waters or wild animals commercially exploited), and work-in-progress which covers both work-in-progress on cultivated biological resources yielding once-only products (e.g., growing crops, immature animals for slaughter) and work in progress on cultivated biological resources yielding repeat products (e.g., immature orchards, immature milk-cows). Importantly, the distinction between cultivated and non-cultivated resources has been modified, especially in relation to forest land for timber production, where the new guidance advises treating biological resources as cultivated where there is a continuum from intensive to extensive forms of control, responsibility and management.

Water is maintained as a separate class, although it is fair to say that the 2025 SNA does not say much about its treatment and countries with experience in its valuation are limited. ⁱ The category “other” contains radio spectra and permits to use of natural resources. ⁱⁱ

An important clarification in the 2025 SNA is that “the total value of the natural resource should be recorded against the relevant class of natural resource, such as land or mineral and energy resources” (paragraph 27.20 of the 2025 SNA), where “total value” refers to a value reflecting the full economic benefits attributable to the resource. The effect of recording this total value against the specific class of resource is that, unlike the recording in the 2008 SNA, values for natural resources are not attributed to any associated contracts or leases. For example, tradeable fish quota (assuming a competitive process) may provide a proper valuation of fish resources, but this value should be recorded as fish resources, not as contracts, leases and licenses. The main rationale for this clarification is that it makes more sense to say that a country is rich in fish resources than in fish quota. Moreover, it ensures better cross-country comparability as countries may manage their resources differently, for example, some may have a quota management system for fish stocks, while others do not. The only exception to this general principle is the treatment of radio spectra, where the asset value may be split between the radio spectra itself and the associated license or permit. ⁱⁱⁱ

3.2 Recording of depletion as the cost of production

Arguably, the most important change of the 2025 SNA when it comes to the measurement of natural resources is the treatment of their depletion as a cost of production, instead of recording this as another change in volume, as in the 2008 SNA. This will affect net aggregates such as net domestic product, net national income and net saving. Net measures are conceptually preferred over gross measures, as they provide better signals to policy makers about the sustainable level of economic activity (see e.g., paragraph 21.104 of the 2025 SNA). Net measures account for the effect of using up the capital base on which future economic growth and broader well-being depend. For example, it has long been recognized (e.g., Repetto et al. ⁵ that a country may overharvest its timber or fish stocks, or exploit their non-renewable mineral and energy resources, thereby boosting its GDP in the short term but undermining its long-term economic potential. Moreover, the treatment of depletion as a cost of production ensures a similar treatment of depletion of natural resources and depreciation of produced assets.

Depletion of natural resources is defined as

the decrease in the quantity of the stock of a non-produced natural resource over an accounting period that is due to the extraction of the natural resource by economic units occurring at a level greater than that that of its growth; in monetary terms, it corresponds with the decline in future economic benefits, due to extraction in excess of its growth, that can be earned from a resource, the value of which is based on the physical flows of depletion using the price of the natural resource in situ. (paragraph 7.286 of the 2025 SNA)

This definition is fully aligned with the SEEA Central Framework, which first proposed and standardized the measurement and definition of depletion in 2012. An important aspect of the definition is that depletion is underpinned by changes in assets in a physical sense. For instance, for non-renewable resources, such as oil and gas or mineral resources, depletion measures the physical run-down of these assets; without extraction, there cannot be depletion. There is no accounting for the natural regeneration of these resources, as this does not occur within human time-scales. Instead, discoveries of new resources are recorded as other changes in volume.

For renewable resources such as biological resources, the treatment is more complex, as these are living resources that have a capacity to regenerate, and only extraction (or harvest) going beyond (net) annual growth of the resource is to be taken into account. Furthermore, the 2025 SNA makes an important conceptual distinction for these types of resources between work-in-progress (e.g., standing timber) and the underlying asset (e.g., forest land). In support of 2025 SNA implementation, the OECD has developed a handbook called Measuring Natural Resources in the National Accounts: A Compilation Guide, ⁶ with detailed recommendations accompanied by workbooks to illustrate calculations. The guide ⁶ clarifies that “depletion should be understood as a reduction in the capacity of the non-produced underlying asset to generate future economic benefits (timber) due to overextraction of the produced overlying asset”. The effects of overextraction are therefore recorded not only as a withdrawal from inventories but also as a cost of depletion, to the extent that the level of expected future benefits derived from the underlying asset declines due to overextraction. Likewise, underharvesting of biological resources (for instance, in order to allow fish stocks or forests to regenerate) is recorded in the 2025 SNA in a symmetrical manner as negative depletion.

It should be noted that a range of natural resources, such as renewable energy resources, radio spectra, and land not in use in extractive economic activities, are not subject to depletion. The OECD guide further recommends not to estimate the depletion of water resources nor depletion of agricultural land due to a lack of agreed measurement approaches. Produced biological resources, yielding repeat products such as dairy cattle or orchards, are subject to depreciation, not depletion. Produced biological resources, yielding once-only products such as animals for slaughter, timber resources, or agricultural crops, are also not subject to depletion and changes in these resources due to extraction or regrowth are recorded as changes in inventories.

The monetary value of depletion is obtained by multiplying the physical extraction (less growth) by the so-called price of the natural resource in situ – the price of a single unit of the asset before extraction. This price is derived by dividing the monetary asset value by the physical stock of the resource at the same point in time, where the monetary value itself can be obtained by applying a suitable valuation method. The annex of chapter 4 in the 2025 SNA includes a preference order of valuation methods, starting from observed market prices, market-equivalent prices, the indirect valuation method, and net present value of future resource rents as a last resort. As further detailed in the OECD Guide (and in Annex 5.1 of SEEA Central Framework), using physical information about stocks and levels of extraction, together with monetary estimates of the value of the resources at the start and end of the accounting period, one can derive a monetary asset account that decomposes changes in the value of assets during the accounting period into relevant flows such as depletion/depreciation, revaluation, discoveries, or reclassifications. ^iv

3.3 Split ownership approach for monitoring the ownership of natural resources

In the SNA, asset ownership is typically based on economic ownership. However, the 2008 SNA made an exception for natural resources subject to a resource lease, which were to be recorded in the balance sheet of the legal owner. The 2025 SNA no longer allows this exception and therefore distinguishes three possible situations as detailed in section C of chapter 27 (paragraphs 27.15 to 27.19): (i) “Legal owner allows the resource to be used to extinction”, in which case it considers economic ownership to have been transferred from the legal owner to the extractor; (ii) “Legal owner can extend or withhold permission for use of the resource from one year to the next”, which is to be recorded as a resource lease; and (iii) “Legal owner may allow the resource to be used for an extended period of time in such a way that in effect the user controls the use of the resource during this time with little if any intervention from the legal owner”. In this third case, the 2025 SNA considers the economic ownership to be shared between the legal owner and the extractor, requiring the asset value to be split in accordance with the share of benefits obtained by each of the economic owners. By splitting the ownership of the relevant assets, the 2025 SNA ensures consistency between the recording of income flows (in the current accounts: the extractor derives income from production, the legal owner through the receipts of rent) and wealth (in the balance sheets: asset value split between extractor and legal owner).

For the measurement of the split ownership approach, the starting point is the total resource rent, which measures the benefits (or capital services) provided by the natural resource to all beneficiaries. The resource rent can be calculated by applying the residual value method to the economic activity linked to the natural resource in question. Specifically, following the SEEA Central Framework, the method (described in paragraph 4A.32 of the 2025 SNA) deducts from output (in basic prices) all intermediate costs, remuneration of employees, other taxes less subsidies on production and the user cost of capital used in production, ^v but adds back specific taxes less subsidies on production. The remaining residual can be seen as the return to natural resources used in production, which itself consists of an income and a depletion element.

In order to split the ownership of the asset, one has to calculate how much of the resource rent is captured by the legal owner (usually the government) in the form of receipts of rent. Here, the 2025 SNA clarifies that

any payments made by the user/extractor of a non-produced natural resource to the owner of the natural resource, which are linked to the use/extraction of that resource, in particular to the quantity and/or value of that resource, should be recorded as rent. These would include, for example, royalties, sur-taxes, and permits. (paragraph 8.173 of the 2025 SNA).

For example, if the resource rent was 80, and the payments/receipts of rent were 40, the asset value would be split 50–50 (assuming the arrangement remains stable over the course of the exploitation of the resource). ^vi In principle, splitting the ownership of assets applies to all types of non-produced natural resources (as long as conditions of the third situation mentioned above are met), although occurrence may differ between resources. For example, chapter 27 of the 2025 SNA mentions that agricultural land is typically subject to a resource lease.

Resource rent can be decomposed into an income element and a depletion element. In addition to the splitting of assets, the SNA also recommends that the cost of depletion be apportioned between the legal owner and extractor consistent with their respective share of the asset value. The specific recording is illustrated in Table 27.1 of the 2025 SNA: the cost of depletion is recorded in full in the production account of the extractor, but part of the depletion cost is allocated to the legal owner in the allocation of earned income account, with the result that the capital accounts and balance sheet reflects depletion borne in line with their respective share of asset value.

Splitting the ownership of assets provides important insights to policymakers about how much of their natural resource wealth is given away for free by governments, an issue that has been raised in the context of the so-called resource curse literature, which investigates why countries abundant in natural resources appear to have lower than expected economic growth rates.

4 Measuring the environment in complementary accounts

The environment is a multi-faceted domain, and accounting for it in a comprehensive and meaningful way is challenging. Not only are there multiple interacting components and systems, but there is also a wide range of ways in which people, communities and economies more generally interact with the environment. The general focus of the SNA has been on recording the extraction and use of resources from the environment by economic units. This is an important perspective in terms of deriving measures of economic activity and the increased focus on incorporating measures of depletion as a cost of production. Monitoring (the changes in) the value of natural resources is considered an important step forward in supporting the measurement of sustainability.

However, the SNA's integrated framework does not encompass the measurement of the wider range of environmental-economic connections. Specifically, it does not provide information on (i) the balance of materials flowing into and out of the economy; (ii) the contributions of the environment to well-being beyond the use of extracted resources; (iii) the pressures and impacts of economic activity on the quality of the environment; and (iv) the range of environmental activities and transactions that respond to environmental challenges.

With these measurement objectives in mind, a comprehensive set of accounts, the System of Environmental-Economic Accounting (SEEA), has been developed over the past 30 years to complement the economic accounts of the SNA and support a richer discussion of our relationship with the environment and its various components and hence provide a better understanding of sustainability and well-being.

The central framing for developing these accounts considers that the economy is nested within the environment, as shown in Figure 2 below. With this general framing in mind, the SEEA extends and adapts the main accounting principles and structures of the SNA to build complementary accounts. The accounting principles and structures include, amongst others, accounts for non-financial assets, supply and use tables, economic units and time of recording. This approach facilitates the presentation of environmental data following a rigorous and commonly understood framework of stocks and flows, and supports the integration of environmental and economic data for analytical and reporting purposes.

Figure 2.

Integrated systems view of the economy and natural capital. Source: 2025 SNA, Figure 35.2 from SEEA Ecosystem Accounting, Figure 2.1.

This section summarizes the four main accounting themes of the SEEA framework: accounting for natural resources, accounting for land and ecosystems, accounting for environmental flows, and accounting for environmental transactions. These accounting themes are described in two central documents: the SEEA Central Framework ⁷ and the SEEA Ecosystem Accounting. ⁸ These documents are complemented by manuals on specific topics, such as accounting for water ⁹ ; energy ¹⁰ ; agriculture, forestry and fisheries ¹¹ ; oceans ¹² ; and tourism ¹³ , which all apply the same central concepts and accounting structures.

4.1 Accounting for natural resources

As a direct complement to the scope of the SNA, accounting for natural resources is described in the SEEA Central Framework. The purpose of developing these accounts is to organize data on the stocks and changes in stocks of each of the resources and hence support an understanding of whether the current patterns of extraction and harvest of resources are sustainable.

The aim is to compile comprehensive accounts in physical and monetary terms for individual natural resources. The SEEA Central Framework describes these accounts for both non-renewable and renewable natural resources, including mineral and energy resources, soil resources, timber resources, aquatic resources (in particular fish stocks) and water resources. The accounts for natural resources described in the SEEA Central Framework follow the same general structure as the relevant accounts in the integrated framework of the SNA, although SEEA has a clear focus on recording changes in the physical stocks of resources.

4.2 Accounting for land and ecosystems

Accounting for land and ecosystems is described in the SEEA. The starting premise is that a geographic area, such as the total area of the economic territory of a country, can be fully delineated into different types of areas according to agreed concepts, definitions and classifications. This measurement scope is broader than that applied in the integrated framework of the SNA, which includes only areas of land that satisfy the definition of an economic asset. Further, the scope of the SEEA explicitly includes all inland waters and marine areas within a country's Exclusive Economic Zone (EEZ).

The SEEA Central Framework has a focus on tracking the areas and changes in the area of a country's land use and land cover, which can provide important information on how the vegetation of certain areas of a country is changing (e.g., due to deforestation) and monitor the balance of ways in which land is used (e.g., for agriculture). The SEEA Ecosystem Accounting goes further in ecological terms to provide information on the composition and changes in ecosystem types (e.g., wetlands, mangroves, rivers, grassland) across a country and thus provides a framework that supports measurement of changes in the condition (quality) of the environment (e.g., changes in soil quality or species diversity). Tracking levels and changes in ecosystem condition can provide information about how human activity impacts the quality of the environment (e.g., as a result of fertilizer use).

In accounting for land and ecosystems, the relevant non-monetary data can be presented in tabular form, but it is also common and of significant analytical benefit to present data in the form of maps, which best support spatial analysis. Spatial analysis is needed, since, at a national scale, it is likely that the effects of important changes occurring at the landscape scale are overlooked, and the associated sustainability challenges are ignored.

Figure 3 below shows the set of ecosystem accounts, including their connections. SEEA Ecosystem Accounting provides more detailed guidance on the concepts, definitions, classifications and accounting treatments.

Figure 3.

Connections between the ecosystem accounts. Source: SEEA Ecosystem Accounting. ⁸

Accounting for ecosystems commences with delineating ecosystem assets within an ecosystem accounting area (e.g., a country, province, catchment) based on a classification of ecosystem types, for example, forest ecosystems, savannas, mangroves, estuaries, lakes and urban ecosystems, and how their extent is changing over time.

Other aspects of accounting for ecosystems build on the delineation of ecosystem assets across a landscape or country to provide a structured and coherent data set on the condition of ecosystem assets, the ecosystem services generated by ecosystem assets in physical and monetary terms, the use of ecosystem services by different economic units, and the value of ecosystem assets and changes in ecosystem assets, the latter including those which are the result of enhancement or degradation.

4.3 Accounting for environmental flows

A fundamental component in the SEEA Central Framework is the description of standard approaches to the recording of data about environmental flows using a supply and use table structure, with the environment being included as an additional supplier and user. Environmental flows concern flows of substances such as water, energy, solid waste, air emissions, that move from the environment to the economy (natural inputs), within the economy or from the economy to the environment (residuals) (see Figure 35.4 in the 2025 SNA). The tracking of environmental flows supports a direct connection to data on production and consumption in the integrated framework of national accounts and, more generally, provides insight into the pressures and impacts on the environment from different industries and how this is changing over time. The information can be readily linked to measuring the success of progress toward a more circular economy, a common focus of sustainability policies. Further, these accounts are essential for building footprint indicators that reflect the quantity of carbon, energy, materials, water and emissions embedded in products being consumed domestically or traded internationally.

4.4 Accounting for environmental activities and transactions

The three accounting themes discussed above (i.e., natural resources, land and ecosystems, and environmental flows) focus on recording different stocks and flows related to the environment. The fourth accounting theme focuses on identifying transactions, such as environmental taxes, environmental subsidies, environmental protection expenditure and the production of the environmental goods and services sector. While conceptually all of these transactions are within the scope of the integrated framework of the SNA, in practice, the major challenges are related to the identification of the relevant transactions, especially in terms of whether a particular transaction has a primary purpose which is environmental, and a consistent classification of the transactions to support comparability over time and across countries. These data are of high relevance in the discussion of environmental sustainability since they provide insight into the responses of economic units to environmental challenges. Many of the transactions concern government activity and regulation concerning natural resources, but there is also the potential to record the activities of businesses and households related to production and expenditure for environmental purposes.

5 Considerations in measuring and monitoring the sustainability of capital

The measurement of all types of capital – economic, natural, human and social – in more comprehensive ways is a significant undertaking. This section highlights some considerations that can arise in the measurement and interpretation of stocks and flows of capital. A more general consideration is that in applying a capital-based approach to measuring sustainability, it is common to consider each type of capital separately, while ideally it concerns an analysis of the combination of capitals in any given context that will most fully inform an assessment of sustainability. In that regard, it is particularly important that the 2025 SNA has presented a holistic framing while still recognizing that some elements, such as social capital, require much further statistical development and that other elements, such as measures of subjective well-being will be beyond the measurement scope of statistical frameworks like the integrated framework of national accounts including complementary sets of extended and thematic accounts.

5.1 Weak and strong sustainability

A focus on the measurement of the stocks of capital, in addition to the related flows and benefits, can support different perspectives and interpretations of sustainability. In economic theory, the sustainability of past development is implied if the level of wealth in volume terms is non-declining. Ideally, the measurement of past trends in wealth should be calculated at a relatively detailed level for specific asset types (i.e., for various types of economic capital, natural capital, human capital and – though not yet developed – social capital). Since the relative prices of each asset type will change over time, it is expected that there will be substitution between asset types that would then be revealed in the measurements in both physical and monetary terms. Based on these trends in substitution and other information, such as limits on the availability of stocks of each asset type, projections may be made about future flows of benefits from the stocks as part of an assessment about future prospects for sustainability and well-being.

In this framing, the concept of weak sustainability assumes a situation where all types of capital (and all more detailed asset types) are perfect substitutes, a situation which is highly unlikely to occur. Importantly, the measurement of relative prices and changes in the volume of wealth does not need to make an assumption of weak sustainability a priori. Conversely, the concept of strong sustainability assumes that no substitution is appropriate, which again is a situation which is unlikely to be revealed in the measurement of past trends. From an accounting perspective, the organization of data for multiple capitals, for example, on economic, natural and human capital within one framework, can support analysis of the substitutions between types of capital that do take place over time and hence support a richer understanding of the characteristics of a country's capital base.

Further, in making projections about future trends, it may be relevant to identify specific types of capital which should not be lost. With respect to natural capital, the concept of critical natural capital has been used to this end, i.e., identifying those stocks of natural capital on which society has a critical level of dependence. The development of projections for the volume of wealth based on maintaining certain capital stocks and comparing these projections to the subsequent trends may be of significant policy and analytical interest.

5.2 Valuation of natural capital in monetary terms

As described earlier in this article, the integrated framework of the SNA incorporates a range of net measures which adjust for the costs of depreciating and depleting economic and natural capital. These net measures include net domestic product, net national income and net household saving. Furthermore, monetary values in balance sheets are recorded at their depreciated or depleted values. All of these measures require valuation in monetary terms. Conceptually, a similar type of adjustment that considers investments in and losses of human capital as an input to production can be envisaged.

To support a wider framing of well-being that goes beyond the production boundary of the integrated framework of the SNA, the SEEA Ecosystem Accounting describes the potential to compile extended accounts that incorporate monetary values of ecosystem services and associated monetary values of ecosystem assets and changes in the value of those assets reflected in measures of enhancement and degradation. This extension requires an integration of standard exchange value-based approaches to valuation methods used in the SNA with non-market valuation techniques that have been developed in environmental economics.

Beyond the general challenges of applying non-market valuation techniques, there are a number of accounting challenges in integrating monetary values of ecosystem services and assets, including aligning the values of ecosystem assets with the value of land as an economic asset and determining an appropriate allocation of values to institutional sectors in cases where the beneficiaries are not the owners or managers of an ecosystem, for example where the benefits of water purification services supplied by forest ecosystems benefit many households living downstream.

Therefore, to support integration, the SEEA Ecosystem Accounting describes approaches to applying the same value concept – exchange values – as used in the SNA. The use of the exchange value concept supports the measurement of levels as required for national accounting purposes, and inherently incorporates both price and quantity components. In turn, this supports the measurement of changes in volume terms as needed for the assessment of sustainability.

While the approach outlined in the SEEA Ecosystem Accounting does provide monetary values for natural capital beyond the integrated framework of the SNA, the values do not capture the full range of ecosystem services and related benefits that may be attributed to ecosystems and, more broadly, any monetary value of natural capital will not reflect the complete set of values that can be attributed to natural capital. The major reason for this is that in applying the concept of exchange value, the integrated framework of the SNA and the SEEA limit the scope of measurement to what are commonly called “use” or “instrumental” values, i.e., those values derived by people and economic units from natural capital through the direct or indirect use of natural capital in production or consumption.

This limitation to use values implies the exclusion of non-use values, i.e., (i) existence values where the value is based on knowledge that the ecosystem is present now; and (ii) bequest values where the value is based on making sure that the ecosystem is available to future generations. Also, use values exclude intrinsic values (i.e., values that are inherent to the asset and independent of any human experience or evaluation) and relational values (i.e., values that are relative to the meaningfulness of relationships between individuals and the environment). Both of these types of value are likely to be relevant considerations in decision-making, but cannot be measured directly in monetary terms. The measurement of the environmental stocks and flows in physical terms, as described in the SEEA, can provide important information to support analysis of these non-instrumental values.

It should be noted that for any given stock of natural capital, it is most likely that different stakeholders will hold different combinations of the values just described (i.e., there are multiple value perspectives). Some of these perspectives may be able to be expressed in monetary terms, as just noted, some may not. In this context, the role of statistics and accounting is not to provide a single measure or value but to organize a coherent set of complementary information that allows decision-making processes to function as efficiently as possible.

Finally, it is highlighted that the discussion of extending the production and asset boundary to support broader measurement of well-being is not only limited to the environment. Concepts such as unpaid household activities will not only lead to an extension of the production boundary but will also result in an extension of the asset boundary by recording, for example, expenditure on equipment for preparing meals as capital formation (the integrated framework of national accounts currently records this expenditure as final consumption). These extensions concerning unpaid household activities may also highlight the potential to consider the contributions of human capital more broadly. Again, as for ecosystem services, there are challenges in determining agreed valuations of this non-market activity, but the potential for more comprehensive measurement of well-being and sustainability using multiple capitals approaches remains.

5.3 Aligning economic benefits and ownership

In defining assets, the integrated framework of the SNA makes a direct link between economic ownership, including collective ownership, and the future economic benefits that are attributable to that asset. However, for some types of economic analysis, the attribution of economic benefits and costs only to economic owners is not appropriate and alternative presentations of data are relevant. This is particularly relevant for natural capital, and the following discussion is focused on that type of capital. However, similar issues will arise wherever there are connections between different types of capital and where the type of asset is more collective in nature – such as public infrastructure, historical and cultural sites and social capital in all its forms.

To demonstrate the issues in the context of natural capital, consider the example of water bodies used for water supply, which may be degraded as a result of excess nitrogen use in agricultural activities. Consequently, there is a loss of benefits (or increased costs) to the economic owner that is not related to the use of the asset by that owner, but due to the activity of another economic unit. In these cases, there is often interest in developing alternative allocations and presentations of the flows of benefits and the costs of degradation or capital loss, such that the connections of different economic units to the assets are revealed. This general area of economic analysis concerns the assessment of externalities. In the example just described, the loss of benefit to the water supply company from damage to the water body might be attributed as a cost of production to the agricultural activity whose excess use of nitrogen is causing the damage.

Although standard accounting-based approaches do not provide results that reflect these alternative presentations, the data organized using accounting structures, especially when it is extended to capture a more complete set of data on multiple capitals and non-market benefits, provides a well-structured information set to support such analysis. Further, externality analysis will require a baseline set of information and also a counterfactual or alternative scenario for the purposes of comparison. As for the assessment of sustainability just noted above, accounting-based approaches can provide the baseline information set for use across multiple analyses.

5.4 Links to the assessment of capacity, resilience and risk

The assessment of sustainability is often discussed in the context of other systems-related concepts such as capacity, resilience and risk, which can all be linked to the discussion of ensuring well-being is sustained in the future. The assessment of all of these concepts is related in the sense that they require consideration of the future and the projection of potential changes to the stocks of capital. Accounting-based approaches that bring together information in a structured way and which cover multiple capitals provide an excellent structure for the required baseline information about past trends and current levels of relevant stocks and flows.

In addition to providing baseline information, accounting-based approaches support the use of a common framing for the formulation of alternative scenarios and assumptions. In particular, the use of a capital framing facilitates the organization of complementary data on relevant thresholds for the stocks of capital; for example, data on relevant biophysical limits (e.g., with respect to water quality) can be presented alongside accounting information on the current condition of assets. In this example, this complementary data would allow identification of those ecosystem assets that are close to physical limits.

With respect to the assessment of risk in particular, a common starting point is understanding risks in quantitative terms, for example, due to the effects of climate change on agricultural production, or the effects of pollution on labor productivity. From this starting point, the assessment of associated financial risks to companies and to the wider economy can be evaluated. The use of accounting-based approaches that present both physical and monetary data and that are designed to be integrated with standard economic data and models can provide a robust basis for these assessments.

6 Sustainable finance

Finance is the mechanism through which societies invest in capital, and thereby maintain and build the capacity to generate benefits over time. In the context of sustainability, sustainable finance channels financial resources towards activities that improve environmental conditions, strengthen social outcomes, or enhance governance practices. Sustainable finance has a dual purpose: (i) it increases the quantity of capital (more assets, upgraded infrastructure, restored ecosystems); and (ii) it increases the quality of capital in ways that support sustainable development (e.g., low-carbon energy systems, climate-resilient infrastructure, conservation efforts).

Financing for sustainability purposes has grown as an activity, and policy attention on sustainability issues has intensified. While the financial instruments (e.g., loans, debt securities, equity and investment fund shares/units) that are used to provide financial resources are the same as those used for other purposes, there is an increasing call for separately monitoring the level of financing for sustainability purposes. Examples relate to measures of the value of green bonds, which are considered important for tracking financial investment in the transition of the economy and informing decisions on incentives for providing such finance.

Even though definitional clarity is still an evolving area of research, the 2025 SNA and also BPM7 provide workable definitions in order to operationalize the concept of sustainable finance. ^vii Two types of sustainable finance have been defined in the 2025 SNA and BPM7: ESG (Environmental, Social, Governance) finance and green finance, with green finance being a subset of ESG finance. ESG finance is “finance for activities or projects that sustain or improve the condition of the environment, society or governance practices”. Green finance is “finance for activities or projects that sustain or improve the condition of the environment”. The general principle for establishing greenness is positive contribution to the environment, rather than “do no harm” (paragraph 35.122 of the 2025 SNA).

To operationalize these general definitions, paragraph 35.123 of the 2025 SNA recommends

to compile supplementary measures of ESG finance and green finance as “of which” items for the following financial instruments: debt securities (AF3), loans (AF4), equity (AF51) and investment fund shares/units (AF52). The definitions of each of the instruments are slight adaptations of the general definitions above. Thus, for ESG debt securities, the scope concerns those where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of the environment, society or governance practices, or where the issuer agrees to achieve performance objectives that improve the condition of the environment, society or governance practices. For ESG loans, the scope concerns those in which 50% or more of the debtor's activities improve the condition of the environment, society or governance practices. In the case of business loans, the debtor's activities would be reflected in the business's revenue, while in the case of loans to households, they would depend on the use of the loan proceeds. For ESG equity, the scope concerns those equity investments by investors in institutional units in which 50% or more of the institutional unit's revenue comes from activities that improve the condition of the environment, society or governance practices. For ESG investment fund shares/units, the scope concerns shares or units in investment funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment, society or governance practices. The definitions concerning green instruments have the same measurement scope except that they are limited to improving the condition of the environment.

Consistent with these recommendations, BPM7 also encourages countries to compile similar measures of ESG and green finance for cross-border stocks and flows, as supplementary items outside the standard components. BPM7 also suggests compilation of other environmental indicators, including the physical location of investments, foreign direct investments in specific sectors, as well as climate-related international cooperation grants to low-income countries (BPM7, Annex 10).

7 Summary and conclusions

A purely economic accounting perspective cannot, on its own, capture the multi-dimensional nature of well-being and sustainability. The integrated framework of the 2025 SNA has clearly put more focus on the measurement of well-being and sustainability. In relation to monitoring sustainability, the integrated framework of national accounts has now introduced a new headline category for natural resources as a separate class of assets, including improved guidance on certain classes of natural resources, accounts for depletion as a cost of production, provides recommendations for monitoring sustainable finance, and the like. Furthermore, by providing implementation guidance in the form of supporting manuals, countries are now in a stronger position to actually compile data on natural resources, something which was clearly lacking up to now.

Having said that, more complete accounting for sustainability requires extending the lens to multiple capitals: economic, natural, human, and social capital. Economic capital was already well covered in the integrated framework of the SNA, but has now been extended with data as an asset. The integrated framework does not (yet) include human capital as an asset, for a variety of conceptual and practical reasons, but the 2025 SNA includes guidance in the form of supplementary accounts on education and training, including the measurement of human capital, with references to already existing compilation guidance. For the monitoring of social capital, more research is needed on how to frame this type of capital in an integrated accounting framework.

Natural capital is captured, albeit partially, in the integrated framework of national accounts, but more is needed to truly monitor the environmental dimension of sustainability. The SEEA – alongside the evolving 2025 SNA guidance – creates a broader measurement architecture that integrates environmental realities with economic statistics. By structuring data on natural resources, land and ecosystems, environmental flows, and environment-focused transactions, SEEA makes it possible to analyze how the environment supports well-being, how economic activity affects environmental quality, and how policy and market responses are unfolding.

Extending the lens to multiple capitals deepens our understanding of sustainability. It clarifies that substitution among different types of capital has limits, that some stocks are critical and must be maintained, and that monetary valuation – though essential – captures only part of the story. Accounting-based approaches offer the baseline, coherence, and comparability needed to design scenarios, assess risks, and plan transitions. They also support externality analysis, showing where costs and benefits diverge from ownership, and they connect directly to sustainable finance, which mobilizes resources toward activities that improve environmental conditions and social and governance outcomes. In short, the integration of SEEA with SNA provides a structured, evidence-based foundation for measuring environmental sustainability. It enables governments, businesses, and communities to move from aspiration to accountable action, tracking whether today's decisions preserve and enhance the capacity to deliver well-being for current and future generations.

Importantly, statistical developments do not come to a halt with the introduction of the 2025 SNA. From a conceptual perspective, it should be noted that the 2025 SNA includes, in Annex 4, a research agenda for future improvements in the guidance. The agenda includes, amongst other things, the treatment of human capital as an asset in the integrated framework of national accounts, the treatment of the atmosphere as an asset, the recording of flows involving the harvest of biological resources by units other than the economic owner or where there is no economic ownership, the recording of depletion of non-produced non-financial assets other than non-produced natural resources, and the treatment of climate offsets. Beyond the SNA, an agreement has already been reached to update the SEEA Central Framework, and work on this update is ongoing. From a practical point of view, the measurement agenda is quite loaded, and much work is underway to improve statistics on the various types of capital, supported by implementation guidance that has been developed in the recent past. The whole statistical community is well aware of the need to improve the evidence-based foundation for monitoring well-being and sustainability.